As part of a comprehensive trade agreement, President Donald Trump said on Truth Social Tuesday that his administration had struck an agreement with Japan, one of the biggest trading partners of the United States, to reduce its tariff rate to 15%.
In contrast, Trump threatened Japan with a rate of 24% on April 2 and a letter on July 7 threatening to impose a 25% tariff on Japanese goods. According to World Bank data, the effective U.S. tariff rate on Japanese imports was less than 2% prior to Trump’s current term.
The 15% rate is the lowest so far among nations that sell more goods to the US than they purchase from it, according to Japanese Prime Minister Shigeru Ishiba, who confirmed the arrangement.
He told reporters in Tokyo on Wednesday, “We have done everything we can to safeguard our national interests.” “We have had the best outcomes among nations with a trade surplus with the United States.”
The most recent deadline Trump has given for nations to reach agreements to avoid tariff rates he himself set in dozens of letters he posted on social media is August 1. Treasury Secretary Scott Bessent stated on Fox Business Network on Tuesday that the deadline was “pretty hard,” despite the fact that it has previously been postponed.
The government has signed a few framework agreements that could eventually be transformed into full-fledged trade agreements, but has not yet finalized any real trade agreements since Trump’s so-called Liberation Day on April 2.
Japan has been frantically attempting to minimize the impact of Trump’s worldwide tariffs. Japan’s top trade negotiator has been to the US at least eight times. On Monday, he spent more than two hours meeting with Commerce Secretary Howard Lutnick.
Trump said that as part of the deal, Japan would “invest $550 billion dollars into the United States, which will receive 90% of the Profits, at my direction.” The nature of such an investment was uncertain.
According to the U.S. Bureau of Economic Analysis, Japan is already the largest foreign investor in the United States, having made $754.1 billion in direct investments last year.
The tariffs “kicked in better than anybody other than me and a few of the people in the room thought could happen,” Trump said during a meeting with House Republicans later Tuesday.
He went on to say that Japan and the US would collaborate on liquefied natural gas in Alaska.
According to Commerce Department data, Japanese consumers and businesses purchased almost $150 billion worth of goods from Japan last year, making it the fifth-largest source of U.S. imports.
Ishiba’s Liberal Democratic Party just lost both houses of parliament, thus the negotiations came at a difficult political moment. Ishiba promised to continue leading, partly to deal with economic challenges.
Trump has played down the likelihood of reaching a deal with Japan.
“You have to realize that, even though the Japanese are tough, we will simply send you a letter that says, ‘This is what you’re going to pay, otherwise you don’t have to do business with us.'” However, there is a possibility,” he stated on June 16.
In May, Trump approved a long-delayed takeover of U.S. Steel by Japan’s Nippon Steel. According to both businesses and the White House, Nippon committed to investing $14 billion to generate at least 70,000 jobs as part of the agreement. Subsequently, the corporations increased that number to 100,000 employment, which they explained included “direct, indirect, and induced jobs.”
